Hithaishi Infra Machine Vs Assistant Commissioner ST FAC

Date: January 6, 2026

Court: High Court

Bench: Andhra Pradesh

Type: Writ Petition

Judge(s)/Member(s): R RAGHUNANDANRAO, T.C.D.SEKHAR

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Subject Matter

Order Demanding Input Tax Credit Reversal Set Aside Upon Restoration of GST Registration

Input Tax CreditRegistration

Summary

The writ petition is allowed, and the order demanding reversal of Input Tax Credit (ITC) is set aside because the petitioner's GST registration, which was initially cancelled, has since been restored by a High Court order, thereby removing the basis for the ITC reversal demand.

Summary of Facts and Dispute:

Impugned Action: The 2nd respondent issued a show cause notice dated 24.08.2024 for cancellation of GST registration, which was subsequently cancelled by order dated 10.09.2024, effective from 16.07.2020. Later, the 1st respondent issued a show cause notice dated 13.02.2025 demanding reversal of Rs. 22,68,580/- in Input Tax Credit (ITC), followed by an assessment order dated 01.03.2025 confirming this demand.
Petitioner's Argument: The petitioner contended that it could not reply to the show cause notice due to its accountant leaving and lack of information regarding the notice upload due to the cancelled registration. Crucially, the petitioner's GST registration had been subsequently restored by the High Court in WP No. 26305 of 2025 dated 24.09.2025, which, according to the petitioner, rendered the demand for ITC reversal moot.
Core Question of Law: Whether the demand for reversal of the closing balance of Input Tax Credit is sustainable when the petitioner's GST registration has been restored by a High Court order.

Key Legal Issues & Findings:

Legality of ITC Reversal Post-Restoration of GST Registration

The Court considered the implications of the restoration of the petitioner's GST registration on the demand for Input Tax Credit reversal.

Basis of Impugned Order: The assessment order demanding ITC reversal was passed on the ground that the petitioner's GST registration was cancelled and it had neither filed Form GSTR-10 nor obtained a new GST registration for the transfer of the closing credit.
Impact of Registration Restoration: Since the petitioner's GST registration was restored by the High Court's order dated 24.09.2025 in WP No. 26305 of 2025, the foundational ground for demanding the reversal of the closing balance of ITC no longer exists.

Ruling:

Outcome: The impugned assessment order dated 01.03.2025 demanding reversal of Input Tax Credit of Rs. 22,68,580/- is set aside.
Directions: The writ petition is allowed.
Liberty: The respondents are not precluded from initiating appropriate action against the petitioner in accordance with law.

FULL TEXT OF THE JUDGMENT/ORDER OF ANDHRA PRADESH HIGH COURT

1. The petitioner is a register dealer under the GST Act. The 2^nd respondent issued show cause notice dated 24.08.2024 asking the petitioner to submit explanation as to why the GST registration of the petitioner shall not be cancelled on the ground that the petitioner is not conducting business at its principal place of business as per the registration certificate.

2. It is stated that the petitioner could not replied to the said show cause notice and thereafter the 2^nd respondent by order dated 10.09.2024 cancelled the GST registration of the petitioner with effect from 16.07.2020. Thereafter, the petitioner was issued a show cause notice dt.13.02.2025, directing him to reverse the closing balance of input tax credit lying in its Electronic Credit Ledger amounting to Rs.22,68,580/- as per Section 29(5) of the Act. Later, the 1^st respondent passed assessment order dated 01.03.2025 confirming the demand for reversal of closing balance ITC as the registration of the petitioner itself was cancelled. Questioning the said order, the present writ petition is filed.

3. The counsel for the petitioner would contend that he would not give reply to the show cause notice inasmuch as its Accountant has left the petitioner’s firm during April, 2024. He would further submit that in view of cancellation of the registration of the petitioner, it had no information with regard to the issuance of show cause notice being uploaded in the GSTN portal. Apart from the same the order under challenge was assailed on various other grounds including lack of DIN and signature.

4. During the course of hearing, the counsel for the petitioner would submit that questioning the cancellation of registration of the petitioner, a writ petition vide WP No.26305 of 2025 was filed before this Court and the same was allowed by order dated 24.09.2025, consequently the registration of the petitioner’s firm was restored. He would further submit that in view of the restoration of the petitioner’s registration the question of reversal of closing balance of ITC does not arise and requested to set aside the order under challenge.

5. On perusal of the impugned order, it is evident that the same was passed on the ground that the petitioner has not filed Form-GSTR-10 or it obtained new GST registration to get transfer of such closing credit. As the petitioner has availed the said benefit of ITC amounting to Rs.22,68,580/-, it had to reverse the same in view of cancellation of registration. Since, the registration of the petitioner was restored in view of order dated 24.09.2025 in WP No.26305 of 2025 passed by this Court, the question of reversal of closing balance of ITC does not arise in the case on hand. In view of the same, the impugned order is set aside and the writ petition is allowed.

6. Needless to mention, this order will not preclude the respondents to initiate appropriate action against the petitioner in accordance with law.

7. Accordingly, the writ petition is allowed. There shall be no order as to costs.

As a sequel, pending applications, if any shall stand closed.